A startup looking to shakeup investing in a $3.8 trillion market just got a big loan from Citi to launch a new fund

Traders work in the Citigroup booth on the floor of the NYSE in New York

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Thomson Reuters

Pagaya, a New York-based asset manager, has landed $75 million in debt financing from Citigroup.

The upstart company will use the funds for a new leveraged fund.

Pagaya, a New York-based asset manager, landed $75 million in debt financing from Citigroup, the Wall Street giant, the company announced Tuesday.

The company said it would use the funds for its so-called Opportunity Fund, which will utilize nascent technologies such as machine-learning and big data to invest in loans originated by tech lenders such as Prosper and LendingClub. The peer-to-peer lending space has experienced significant growth over the last five years, propelled by low interest rates. Still, money managers face a question: Which loans are worth backing?

That’s where Pagaya comes in. They use technology to help clients figure out which loans are worth investing in based off their risk profile.

“Pagaya’s track record in delivering consistent, positive returns to LPs since inception is a testament to our advanced approach.”

A spokeswoman declined to comment specifically on those returns.

Still, the company which was launched less than two years ago has raised $200 million in capital.

“We are proud to support Pagaya as it grows and launches new initiatives,” Ari Rosenberg, head of consumer finance at Citi, said in a statement. “This transaction is a great example of the continuing evolution of consumer credit as an asset class and growth opportunity.”